The deal will place Nippon Sheet Glass on a par with the domestic rival and current global leader Asahi Glass Co. Pilkington's annual sales are nearly double that of Nippon Sheet Glass.
"We should not content ourselves with our long-standing position as Japan's No. 2 player," President Katsuji Fujimoto said.
As the mature domestic market has little potential for growth, Nippon Sheet Glass is looking to overseas markets to catch up with Asahi Glass.
"The acquisition of Pilkington, which has strong positions in the U.S. and European markets, has set the stage for us to expand our global operations," Fujimoto said.
Nippon Sheet Glass has lagged Asahi Glass particularly in overseas operations.
Business outside Japan accounts for only 15 percent of its total sales, compared with 44 percent at Asahi Glass.
Its overseas operations are concentrated in Southeast Asia. In contrast, Asahi Glass, which began acquiring Western glassmakers in the 1980s, holds more than 20 percent of the U.S. and European markets.
The acquisition will position Nippon Sheet Glass to better serve Toyota Motor Corp. and other Japanese automakers, which are reviewing their global procurement strategies.
Nippon Sheet Glass plans to gear up marketing toward Japanese automakers in Europe, combining its advanced technologies and Pilkington's local production capabilities, a senior company official said.
Larger scale will also benefit Nippon Sheet Glass in price negotiations with suppliers and enhance its research and development capability.
Nippon Sheet Glass and Asahi Glass have survived global competition by fulfilling the strict technical standards of Japanese automakers, such as reinforced strength and processing precision.
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Glassmakers grow on auto demands
Nippon Sheet Glass Co. is moving to global prominence on the strength of Japanese automakers, its biggest customer base. The world's sixth-largest maker of sheet glass is scheduled to complete the purchase of Britain's Pilkington Plc, which ranks third in the world, by the end of June.